Interim Management Statement

Interim Management Statement

Bovis Homes Group PLC

Bovis Homes Group PLC

Interim management statement

Thursday 7 May 2009

Bovis Homes Group PLC is holding its Annual General Meeting at 11:30am today. This statement makes comment on the financial performance of the Group for the period from 1 January 2009 to the date of this statement and provides guidance on the outlook for the current financial year. This statement constitutes Bovis Homes Group PLC’s Interim Management Statement as required by the UK Listing Authority’s Disclosure and Transparency Rules.

In the first 17 weeks of trading to 1 May 2009, the Group has achieved 638 private reservations, some 71% ahead of the comparable position in 2008 of 373 private reservations. Whilst encouraging, this level of trading remains circa 25% lower than that achieved in the comparable period of 2007. To drive cash flow, the Group has prioritised the sale of its advanced build stock with over 400 private reservations being completed stock homes and circa 200 private reservations being stock at or beyond the roof build stage at the date of reservation. The Group has successfully reduced its unsold finished stock from circa 1,000 homes at the start of the year to around 600 homes currently, a significant 40% reduction. The further reduction of this stock position remains a valuable opportunity to generate further cash flow in the balance of 2009.

The market backdrop in which the Group is operating has continued to be challenging. Notwithstanding recent encouraging news of increased mortgage approvals for home purchase published by the Bank of England at circa 39,000 approvals in March 2009, this represents a decline of over 60% compared to mortgage approvals per month prior to the housing market downturn. According to publicly available data from various house price indices, house prices have continued to fall in 2009 with home buyers struggling to secure mortgage finance and an ongoing cautious approach to home valuations by surveyors working for mortgage lenders.

Whilst aiming to achieve profitable returns from the sale of its homes, the Group has prioritised in its strategy for 2009 the generation of strong cash flows from the orderly reduction of housing work in progress, in the main completed stock homes. The Group has therefore continued with pricing policies which set competitive asking prices in local markets which, as anticipated, will reduce the Group’s current year average private sales price and gross profit margin when compared to 2008.

Total reservations for 2009 legal completion, including the Group’s brought forward reservation position on 1 January 2009 and social housing reservations secured in the year to date, at 1 May 2009 stood at 1,092 homes compared with 1,383 reservations at the same point in 2008. As previously guided, the current level of social housing reservations is significantly lower at 269 social homes compared with 591 social reservations at the same date in 2008.

The Group aims to continue its private sales rate at or around current levels based on an assumption of a continuation of existing market conditions, recognising that the summer sales period is likely to show its typical seasonal slowdown. The Group anticipates legally completing only circa 300 social homes in 2009 compared to circa 600 social homes in 2008. Taking private and social housing together, the achievement of the Group’s aims would lead to a similar volume of legal completions for 2009 as achieved in 2008, albeit skewed towards the second half due to the lower brought forward reservation position on 1 January 2009.

The Group remains cautious in its view of the housing market as visibility remains weak, with a need for increased availability of mortgage finance, particularly for first time buyers, being critical to recovery of market activity. The final volume outcome for the Group in 2009 will largely depend on the strength of the market between now and the end of October 2009.

The Group has been successful in delivering cash flow ahead of its expectations. As a result of stronger cash income to date, continuing success in deferring cash payments on land, low levels of housing production expenditure, and a much earlier than expected receipt of tax credits, net debt as at 30 April 2009 was £47 million. Looking forward to the end of 2009, the Group now expects its debt position to be much improved compared to its previous guidance. In the event that the Group achieves its aims for legal completion volumes for 2009, the Group is likely to generate circa £100 million of net cash flow during the year, having started the year with £108 million of net debt.

The Group has positioned itself well to trade through the current downturn and continues to benefit from its longstanding prudence in the consented land market, the relatively high proportion of its land supply sourced strategically, and low gearing. 2009 will be a year of delivering strong positive cash flow, repositioning the Group’s balance sheet with lower work in progress and low debt levels. This should provide the Group with the opportunity to invest in the residential land market at what it anticipates will be attractive values: an opportunity which the Group believes may begin to emerge in the second half of the year.

Conference Call for analysts

David Ritchie, Chief Executive, and Neil Cooper, Finance Director, of Bovis Homes will host a conference call at 09:00am today, Thursday 7 May 2009, to discuss this Interim management statement.

To access the call please dial [phone] and quote passcode: 5749802. Please dial in 5 minutes prior to the start of the conference call to allow time for registration. A recording of the conference call will be available until midnight on 14 May 2009, commencing approximately 30 minutes after the live call has finished, on: [phone], access code: 5749802#.

	Â	Â	Â
Enquiries:				David Ritchie, Chief Executive
				Neil Cooper, Finance Director
				Bovis Homes Group PLC
				Tel: [phone]
				Â
				Emily Bruning
				Shared Value Limited
				Tel: [phone]